Oct. 10 (Bloomberg) -- Two supporters of New York
comptroller and former mayoral candidate John Liu were sentenced
to prison for a scheme to send thousands of dollars in illegal
contributions to his campaign using straw donors.

Jia “Jenny” Hou, Liu’s former campaign treasurer, was
sentenced to 10 months while Xing Wu “Oliver” Pan, a
fundraiser, was ordered to serve four months.

Hou and Pan were convicted in May after a three-week trial
in federal court in Manhattan of campaign finance fraud in a
scheme to recruit people to pose as donors, conceal their
identities on filings to the city’s Campaign Finance Board and
then try to get matching funds provided by the city.

“The damage done by this crime in adding to the public’s
cynicism over the process is incalculable,” said U.S. District
Judge Richard Sullivan, who presided over the trial. “It makes
people shrug and say the system is corrupt.”

Irwin Rochman, a lawyer for Pan, asked Sullivan to sentence
his client to a term of five years’ probation, including four
months of home detention. He argued a prison term would cause
“substantial harm” to Pan’s efforts to rebuild his life. The
trial was delayed for several months after Pan was involuntarily
committed at a hospital.

Election Process

Before addressing the court, Pan bowed to Sullivan,
prosecutors and to the courtroom audience. Then he apologized
for his crimes.

“I take full responsibility for what I did,” Pan said.
“It is a valuable lesson with a heavy price.”

Sullivan sided with probation officials who recommended a
sentence of four to 10 months for Pan. He said the crime for
which Pan was convicted “is really about undermining the
election process and undermining the electoral system.”

Hou was also convicted of attempted wire fraud, false
statements and obstruction of the federal investigation. Her
lawyer, Gerald Lefcourt, asked Sullivan to impose a non-jail
sentence, citing her age at the time the crimes occured and that
she’d likely be deported to China if she was sentenced to more
than a year.

Hou wiped tears from her eyes as she told Sullivan that
she’d never broken the law or focused on matching funds for the
campaign.

‘My Innocence’

“Throughout these proceedings, and in fact, prior to them,
while the investigation was going on, I have maintained my
innocence,” she said. “With respect for the court, I am not
changing that position. I believed from day one that I never
took any actions with the purpose of obtaining matching funds
improperly.”

She blamed her conviction on her youth and lack of
experience.

“What I lacked was experience in life, and that lack of
life experience meant I did not have the judgment evidently
required to step back and say, ‘Hey, what is really going on
here?’ or to say, ‘Hey, if you impose a quota on fundraisers
they may feel pressured to reimburse people,’” she said. “I
did not have the life experience to exercise the judgment
necessary to ask such questions.”

False Statements

Sullivan told Hou that while he was sympathetic to her
situation, she was still convicted of fraud, making false
statements to U.S. investigators and obstruction.

“I don’t doubt that you were thrust into a situation,”
the judge said. “It’s not a crime to be overwhelmed, it’s not a
crime to be naive and lack life experiences. But again, that’s
not what the jury convicted you of. They convicted you of
fraud.”

Assistant U.S. Attorney Justin Anderson, who sought a
prison term of 24 to 30 months for Hou, said today that she had
attempted to deceive the Campaign Finance Board in the straw
donor scheme. The jury found Hou guilty of obstructing a federal
grand jury investigation into the matter by failing to produce
documents in response to federal subpoenas and falsely claiming
that she’d complied with investigators’ requests.

Matching Funds

The scheme was uncovered after a Federal Bureau of
Investigation agent, posing as a businessman known as “Richard
Kong,” approached Pan seeking to make a $16,000 donation to the
Liu campaign, using straw donors which could be used to obtain
matching campaign funds.

During the trial, jurors saw secretly recorded
conversations and videos of sessions between Pan, Hou and Kong,
which prosecutors said were evidence of wrongdoing.

Prosecutors said that Kong’s donation was above the maximum
allowed by the city campaign finance laws. Kong was actually FBI
Special Agent John Chiue, posing as a rich businessman from
Texas seeking to open a chain of restaurants in New York City.

At an August 2011 meeting secretly recorded by the FBI and
shown to the jury at trial, Pan discussed with Kong how to
circumvent the city’s $4,950-a-person campaign donation limit.
Pan was heard instructing Kong to find 20 straw donors who would
purport to make contributions of $800 each in their own names.
He later used money received from the undercover agent to
reimburse the donors, the U.S. said.

After the agent gave Pan $16,000 in cash, the two discussed
an event for which people were recruited to pose as Liu donors,
the U.S. said.